I don’t always agree with economist Edward Glaeser, but I really enjoyed the talk that he gave at the Vancouver Urban Forum back in 2012 (at least part 2 of it). I came across it on Twitter today and, since it only has about 300 views, I figured that some of you also haven’t seen it.
The argument he makes is that knowledge and education are the bedrock of cities. And since we continue to cluster in cities, despite all of our technological advances, knowledge is clearly more important than space. One of the ways he defines cities is by their lack of space and the closeness of the people.
Of course, this isn’t anything new. If you’ve read his book Triumph of the City, you’ve heard all of this before. But that didn’t stop me from enjoying his talk. It’s a great overview of declining transportation costs, locational advantages, agglomeration economies, the importance of urban density, the impact of small and large firms in a city, and so on.
I also really liked this idea that knowledge is worth more than space. So if you have 20 minutes and you want to get geared up about cities, have a watch.
I don’t always agree with economist Edward Glaeser, but I really enjoyed the talk that he gave at the Vancouver Urban Forum back in 2012 (at least part 2 of it). I came across it on Twitter today and, since it only has about 300 views, I figured that some of you also haven’t seen it.
The argument he makes is that knowledge and education are the bedrock of cities. And since we continue to cluster in cities, despite all of our technological advances, knowledge is clearly more important than space. One of the ways he defines cities is by their lack of space and the closeness of the people.
Of course, this isn’t anything new. If you’ve read his book Triumph of the City, you’ve heard all of this before. But that didn’t stop me from enjoying his talk. It’s a great overview of declining transportation costs, locational advantages, agglomeration economies, the importance of urban density, the impact of small and large firms in a city, and so on.
I also really liked this idea that knowledge is worth more than space. So if you have 20 minutes and you want to get geared up about cities, have a watch.
What they did was use the Forbes 2015 Billionaire List to chart billionaires and billionaire wealth by location and by industry. They also looked at the wealth gap in each location and whether the wealth was self-made or inherited.
A correlation analysis was also done to see what key variables – such as population, density, economic output, global city standing, VC investment, and so on – were positively correlated with a greater concentration of super rich people.
There are 1,826 billionaires across the world according to Forbes. The researchers were able to match 99% of them to a specific metro area / primary residence.
Here are the top 20 metro areas in terms of the number of billionaires:
What they did was use the Forbes 2015 Billionaire List to chart billionaires and billionaire wealth by location and by industry. They also looked at the wealth gap in each location and whether the wealth was self-made or inherited.
A correlation analysis was also done to see what key variables – such as population, density, economic output, global city standing, VC investment, and so on – were positively correlated with a greater concentration of super rich people.
There are 1,826 billionaires across the world according to Forbes. The researchers were able to match 99% of them to a specific metro area / primary residence.
Here are the top 20 metro areas in terms of the number of billionaires:
There’s no shortage of talk about a Canadian housing bubble:
In Vancouver, the price of a single-family home (as of June of this year) increased
Look at Miami at #9.
I suspect that this may surprise some of you. But Miami has grown into a significant global city. As one of my friends from Miami likes to tell me: “The best thing about Miami is that it’s a Latin American city that’s so close to the United States.”
Here are the top 20 metro areas in terms of total billionaire wealth:
A bunch of changes on this list because of extremely wealthly people and families in places like Bentonville (Arkansas) and Omaha.
One of the conclusions of the report is that the size of the city generally matters:
“The geography of the super-rich is a function of larger cities. Both the number of billionaires and their net worth are positively associated with the population of global cities, with correlations of 0.56 for the number of billionaires and 0.44 to their net worth.”
Here is a chart comparing population to the number of billionaires:
Cities such as New York, Moscow, and Hong kong, which sit far above the blue line, have more billionaires than their population size would predict.
Here is a similar chart comparing venture capital investment to the number of billionaires:
Once again, there is a positive association.
Finally, here are a two charts that show which industries have produced the most billionaires:
If you’re interested in this study, you can download the full report here. All of the charts were sourced from the report.
from the year prior. Does that constitute bubble territory?
In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).
The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.
Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?
Here’s an alternative viewpoint.
I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.
Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?
I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.
Look at Miami at #9.
I suspect that this may surprise some of you. But Miami has grown into a significant global city. As one of my friends from Miami likes to tell me: “The best thing about Miami is that it’s a Latin American city that’s so close to the United States.”
Here are the top 20 metro areas in terms of total billionaire wealth:
A bunch of changes on this list because of extremely wealthly people and families in places like Bentonville (Arkansas) and Omaha.
One of the conclusions of the report is that the size of the city generally matters:
“The geography of the super-rich is a function of larger cities. Both the number of billionaires and their net worth are positively associated with the population of global cities, with correlations of 0.56 for the number of billionaires and 0.44 to their net worth.”
Here is a chart comparing population to the number of billionaires:
Cities such as New York, Moscow, and Hong kong, which sit far above the blue line, have more billionaires than their population size would predict.
Here is a similar chart comparing venture capital investment to the number of billionaires:
Once again, there is a positive association.
Finally, here are a two charts that show which industries have produced the most billionaires:
If you’re interested in this study, you can download the full report here. All of the charts were sourced from the report.
from the year prior. Does that constitute bubble territory?
In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).
The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.
Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?
Here’s an alternative viewpoint.
I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.
Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?
I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.
